This watchdog blog, by journalist Norman Oder, offers analysis, commentary, and reportage about the $4.9 billion project to build the Barclays Center arena and 16 high-rise buildings at a crucial site in Brooklyn. Dubbed Atlantic Yards by developer Forest City Ratner in 2003, it was rebranded Pacific Park in 2014 after the Chinese government-owned Greenland Group bought a 70% stake in 15 towers. New York State still calls it Atlantic Yards. Contact: AtlanticYardsReport[at]hotmail.com

Thursday, September 10, 2015

We already heard a highlight from Forest City Ratner CEO MaryAnne Gilmartin's 6/16/15 presentation to the Fifth Annual Brooklyn Real Estate Summit, that Forest City's joint venture partner/overseer, Greenland USA, “needs to see [successful modular construction] to believe it," that "I am a deep believer,” and the problems at the B2 modular tower were "really about the hiccup we had with our partner” Skanska.

The problems, as my recent reporting shows, were more than a hiccup, including significant water damage requiring major interior remodeling.

A full viewing of Gilmartin's presentation, below, shows the charismatic, confident executive disarmingly candid about the "ginormous" green wall surrounding current construction, a previously undisclosed challenge with construction, the true history of the arena roof logo, and the developer's ability to sell bonds for arena construction.

At the same time, she obscured other issues in lieu of candor, such as claiming, regarding damage at B2, "nothing that was different than what we normally encounter and all of it has been corrected."

Forest City's specialty

Of Forest City, Gilmartin stated, "our core competency is public-private partnerships; I'm fond of saying, 'if it's not difficult, we're probably not interested'... We often take lots of disparate parts, bring it together, and partner with government to get the job done."

She talked about the company's evolution in Brooklyn, first building office space, then malls ("we really created the big box platform for retail in the boroughs, in the late 80s," and now residential.

On Atlantic Yards/Pacific Park

"There are very few sites in New York City that offer the density, the access, and neighborhoods, that this site offers," she said of Pacific Park. "So we're bullish on Brooklyn, and super bullish on Pacific Park Brooklyn."

If so, that raises the question of why they weren't willing to hold onto the project in full, but instead sold 70% of the project going forward (minus the arena and B2) to Greenland.

An unmentioned difficulty

"The easiest thing was building the Barclays Center... the ten-year lead-up, the 35 legal actions, and the transit entrance proved to be the most challenging," she said.

Note the use of the term "legal actions," which could encompass hearings or interim decisions, rather than "lawsuits," a term the developer has incorrectly used.

"That little entrance that sits at the prow of the arena," she said, was required to open at the same time as the arena, a $72 million construction project that involved reinforcing columns, correcting for corrosion, and putting "what was supposed to be a fairly simple awning over the entrance."

"It is true, on September 28 [2012], when Jay-Z opened the arena we were really hanging on by a cat hair, because we did not have the Certificate of Occupancy for the entrance," Gilmartin said. "So it was my great fear that I would have to go to then president and CEO's office, Bruce Ratner, and say 'the good news is we are scheduled to host Jay-Z in the arena on September 28, but we cannot open the arena, because the subway entrance has not been finished.'"

She didn't explain the denouement: was it granted at the last minute?

Downsizing and financing the arena

"It is a billion-dollar arena," Gilmartin said, describing "a major inhale at the time of the great recession," after the "great benefit" from the delay, which allowed them to see stadiums like CitiField and Yankee Stadium open, and learn that "the days of million-dollar suites were over."

"We needed to right-size the building in terms of its costs, and its revenue structure," she said, describing how the Frank Gehry design, aimed to accommodate professional hockey and basketball, all the foundations for four adjacent buildings, and a green roof, was dumped.

"It was an extraordinary undertaking, it was priced at about a billion and a half dollars," she said, using a figure I have not previously heard. (It's unclear how much of that relates to the arena only.)

After getting a new building designed, they had to find tax-exempt financing by the end of 2009. "I went to every forgettable office park in the northeast, talking about the arena. with Goldman Sachs," Gilmartin said, acknowledging that "we had no sense of whether we could, in fact, float these bonds."

Mr. Ratner and his bond underwriters — Goldman Sachs and Barclays Capital — expressed confidence in the project and their ability to sell the tax-exempt bonds for the arena (to be known as the Barclays Center), much as the Yankees and the Mets did for their new stadiums

Acknowledging that "the Nets were a terrible team" and the project "really had a complicated story," Gilmartin reflected, "Somewhere along the way, I realized it was really about none of that, it was really about Brand Brooklyn. What it really meant was you were building something in a place that had such deep demand, such deep capacity, and such cultural richness that if you build it, they would come."

They were right.

The arena as catalyst

Gilmartin admitted that, as many critics have said, the arena was a catalyst, or, a Trojan Horse.

"For us, it was really not about the arena, it was the housing," she said. "The arena was really the ticket to the dance. For us, the real attraction to this project, was that, for a long time, we had felt that the railyard was a scar that separated the northern neighborhood from the southern neighborhoods. So, building in scale, we undertook to put together one of the most ambitious housing plans that the city's seen on the part of a private developer in recent past."

If they were really trying to heal the scar, wouldn't they have built earlier over the railyards? Maybe it was also an effort to get control of a public asset before it was put out for bid.

The green roof

Gilmartin said the original plan for an arena green roof "needed to be value-engineered...We built the arena, it's a rubber roof, originally, with Barclays' logo on top of it, quite uninspired, and you can see it from a number of vantage points around the area."

That's interesting, because state officials in 2012 justified the Barclays logo, saying, inaccurately, that it could not be seen from street level.

"So it was a lost opportunity to some of us, but we never let go of this idea we could go back again one day and put a green roof on top," she said. "So, in partnership with our Greenland venture...we undertook a $505 million investment.... It really doesn't benefit the arena, it benefits the community and the residents that will live around the arena. We're really proud of it. By the end of the summer, early fall, you will see all of the sedum in place, and it will be a perfect companion to that $72 million subway entrance."

You bet it benefits the arena, since the green roof helps with needed noise and vibration dampening.

Housing "of the neighborhood"

She showed images of the 535 Carlton affordable tower, saying the designs were "of the neighborhood, they're rich with the color, the feel, and the texture of the communities that they are residing in."

Explaining the naming scheme, she said, "What's amazing about Brooklyn, as we all know, is that Brooklyn has great streets, so we've gone away from the days of numbering [the buildings], lettering them, and calling the buildings by their addresses."

Yet at the same time they eliminate streets for open space.

The huge green wall

"Most of you have already seen the incredibly obnoxious sidewalk bridge that we've built around both of those projects," Gilmartin said. "This was in fact imposed upon us through our partnership with Empire State Development."

"It is ginormous, and really problematic for a lot of people, and I just want to acknowledge it, because I agree, I feel the same way," she said. "It's also not a cheap date to do something like that, yet we had no choice, we were required to do it by our project agreements."

Well, it's a little more complicated. The wall was imposed recently, because of noise from earlier construction, but the wall and its impacts were never disclosed in any public review. Another way, of course, to avoid the noise that prompted the wall requirement would be to decrease the size of the project.

The new luxury
Talking about the condo building, she said, "These are luxury, as I say, defined, Brooklyn style... beautiful apartments with unbelievable light and air, again of the community, of the neighborhood. This is brick, not steel and glass. There are gardens, there are setbacks where you can grow vegetables. There are Great Rooms, there are children's playrooms, and there's an abundant amount of open space, about 8 acres of open space, will be built in phasing."

"It's our plan, or goal, and our hope and to bring a number of architectural voices into the mix, so that every building will be built with a thoughtful level of world-class architecture but not necessarily the same architect," she said.

That of course contrasts their earlier plan when Forest City pushed back on Gehry's desire to do exactly that.

"Normally I would’ve brought in five other architects, but one of the requirements of this client is that I do it," Gehry declared at one event. Forest City claimed one firm would be more efficient, but surely Gehry's stature--and the presumed higher prices it would reap--drove that decision/claim.

In February 2007, the original landscape architect, Laurie Olin, predicted to the New York Observer's Matthew Schuerman that Gehry wouldn’t design every building. Forest City executive Jim Stuckey responded that Gehry “will be the architect on every one of them.”

On modular

"They do say the world is changed by crazy people, and perhaps we were crazy when we thought we could do it, certainly everyone did think that we would fail," Gilmartin said.

I don't think "everyone did think" that they'd fail, but that defensive statement is reminiscent of Ratner's false claim that “We’ve built the arena. They said we’d never build it."

Gilmartin crowed that the "whole new workforce" in the modular factory works "at a fraction of what an on site laborer is paid." The unions support it, she said, because the model might be exported.

Then, as if ignoring the actual delays and increased costs, Gilmartin returned to the mantra that the modular building is "being done in a fraction of the time, a fraction of the cost," as well as more sustainable.

"It is, of course, a living, breathing experiment. The building, when it stands at the corner of Dean and Flatbush, will tell us whether high rise modular has an application in the city," she said, adding the modular could help with Mayor Bill de Blasio's plan to build 80,000 units of new affordable housing "so people can live close to the urban core."

In response to a question, Gilmartin said the affordability levels "are all mandated by the government, it's based on AMIs [Area Median Incomes].

Actually, it's negotiable, and Forest City managed to get the percentages of AMI to rise.

"What's great about it is you don't have poor doors, you don't have a slew of low income housing being built down the street from where all the condos are being built, you have a truly integrated project," she said. "I'd say that, if you were building a neighborhood from scratch, this is how you'd want to build it."

That's a curious echo of the much-quoted Gehry claim about having the opportunity "to build a neighborhood from scratch," which was actually "practically from scratch."

On B2 work

"There was some stuff written about what would happen if the building wasn't entirely sealed," Gilmartin said of B2. "I would say there's some corrective work that we did. But any of you who've walked around a construction site and you see what the condition of the site is as the building's built. It is 90% cleaner, safer, contained, insulated than in a standard construction site. So, again, nothing that was different than what we normally encounter and all of it has been corrected."

Actually, they are still doing interior work and exterior façade adjustments and paint repairs.